Aluminium and other metals rise as US loosens Huawei restrictions

  • Benchmark LME aluminium was bid up 0.3% to $1,803 a tonne in official rings, having touched a 1-1/2 week low of $1,787 in the previous session
  • opper was bid at a steady $6,033 a tonne, zinc was bid down 0.2% to $2,571, lead was up 0.4% at $1,812 in official rings

London: Aluminium rose on Tuesday as a temporary easing of US trade restrictions on China's Huawei offset expected higher output from Norsk Hydro's Alunorte refinery after it was given the green light to increase production.

Washington had previously added Huawei Technologies to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States, escalating Sino-US trade tensions and weighing on metal prices.

Trade friction generally weighs on industrial metals and any sign that it is dying down will get some investors interested again, said BMO Capital Markets analyst Colin Hamilton.

Meanwhile, Norsk Hydro's Alunorte alumina plant could reach 75-85% utilisation within two months, up from about 50% at present, the Norwegian company said.

The plant has been operating at half capacity since a spill in February 2018 prompted regulators and courts to restrict output.

UBS analysts said the Alunorte restart was largely priced in to the alumina market but aluminium would remain under pressure from soft demand and less stringent supply reform in top producer China.

Benchmark aluminium on the London Metal Exchange (LME) was bid up 0.3% to $1,803 a tonne in official rings, having touched a 1-1/2 week low of $1,787 in the previous session after the Alunorte announcement.

"There is not going to be an immediate restart to the facility ... we are quite a while away from it coming back fully," said BMO analyst Kash Kamal.

Market balance: Global primary aluminium output fell to 5.203 million tonnes in April from revised 5.379 million tonnes in March, data from the International Aluminium Institute showed.

Alumina: Wood Mackenzie raised its global market balance for alumina by 100,000 tonnes to 1.2 million tonnes as the increase in Alunorte's production was offset by curtailments in China, analyst Ami Shivkar said.

Copper: The global world refined copper market showed a surplus of 74,000 tonnes in February, compared with a 33,000 tonne deficit in January, the International Copper Study Group said.

Scrap: China's scrap metal importers expect disruption to shipments to start this month because of uncertainty surrounding new scrap restrictions starting in July, depriving the world's biggest copper consumer of a crucial source of the metal.

Spreads: The premium for LME cash zinc over the three-month contract stood at $148.25 a tonne on Monday, not far from a 22-year high of $151 last week.

In nickel, the cash premium against the three-month contract has virtually disappeared after touching a 2017 high of $20 last week.

Other metals: Copper was bid at a steady $6,033 a tonne, zinc was bid down 0.2% to $2,571, lead was up 0.4% at $1,812 in official rings, tin was bid down 0.1% to $19,425 and nickel gained 0.6% to $12,050.


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